MILWAUKEE (CBS 58) -- The Halloween Effect is a theory that stocks perform better from Oct. 31 through May 1 than in the previous six months, and it is the basis for the "sell in May and go away" strategy.
Tom Neumann, a financial advisor with Drake & Associates, joined us Wednesday, Oct. 21 to talk about the theory.
He pointed to last year, when the Dow rose from the mid-47,000s on Halloween to just over 50,000 by February, fell below its starting point in May and then reached a high of 54,349 in August. Neumann says that shows time in the market matters more than timing the market.
Also, he cautioned against knee-jerk reactions and recommended basing decisions on your own financial situation, a diversified portfolio and a long-term plan, along with putting 10% to 15% of income into a 401(k), Roth IRA or other retirement account.
Contact Drake & Associates by clicking here.